Finance Dictionary
Net Income
Definition
A company’s total earnings (or profit); calculated by taking revenues and subtracting the costs of doing business.
Deep Dive
Net income, often referred to as a company's "bottom line," is a crucial financial metric representing the total earnings or profit remaining after all expenses, including operating costs, interest payments, taxes, and depreciation, have been subtracted from total revenues. It is a key component of a company's income statement and serves as a fundamental measure of its profitability and financial success over a specific accounting period.
Examples & Use Cases
- 1A retail company reporting a net income of $50 million for the quarter after successfully managing sales and expenses during the holiday season
- 2A startup company showing a negative net income (net loss) for several years as it invests heavily in research and development and market expansion
- 3Investors calculating a company's earnings per share by dividing its net income by the number of outstanding shares.
Related Terms
RevenueExpensesProfit MarginEarnings Per Share (EPS)Income StatementBottom Line